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The OECD's "Action Plan" to Raise Taxes on Multinational Corporations

Author

Listed:
  • Gary Clyde Hufbauer

    (Peterson Institute for International Economics)

  • Euijin Jung

    (Peterson Institute for International Economics)

  • Tyler Moran

    (Peterson Institute for International Economics)

  • Martian Vieiro

    (Peterson Institute for International Economics)

Abstract

Hufbauer and colleagues critically evaluate the Organization for Economic Cooperation and Development's ambitious multipart project titled Base Erosion and Profit Shifting (BEPS), which contains 15 "Actions" to prevent multinational corporations (MNCs) from escaping their "fair share" of the tax burden. Spurred by G-20 finance ministers, the OECD recommends changes in national legislation, revision of existing bilateral tax treaties, and a new multilateral agreement for participating countries. The proposition that MNCs need to pay more tax enjoys considerable political resonance as government budgets are strained, the world economy is struggling, income inequality is rising, and the news media have publicized instances of corporations legally lowering their global tax burdens by reporting income in low-tax jurisdictions and expenses in high-tax jurisdictions. Given that the US system taxes MNCs more heavily than other advanced countries and provides fewer tax incentives for research and development (R&D), implementation of the BEPS Actions would drive many MNCs to relocate their headquarters to tax-friendly countries and others to offshore significant amounts of R&D activity.

Suggested Citation

  • Gary Clyde Hufbauer & Euijin Jung & Tyler Moran & Martian Vieiro, 2015. "The OECD's "Action Plan" to Raise Taxes on Multinational Corporations," Working Paper Series WP15-14, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp15-14
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Base Erosion and Profit Shifting (BEPS); Corporate Taxes; International Taxation; Tax Policy;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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